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Future imperfect

Simon Haskel on the faults already emerging as we move towards an age of productivity

For the second time this week, the Lords has a debate on productivity and the economy of the future. It’s not clear if this is because of a muddle or it is intentional. I hope the latter as it is such an important topic and one that I have raised again and again for some years.

Let’s start with the government’s recent paper on productivity. It certainly presses most of the right buttons. But like many previous efforts, it is destined to achieve little. Why? Because it mentions everything but prioritises nothing; remembers everything and learns nothing.

If we want to move on from an age of austerity into an age of productivity, management and leadership must be prioritized. The first task must be to encourage a culture of productivity – both in business and government. Without this, much of the work that government does on infrastructure and housing, and in science and education, will be wasted. This now has added urgency because in the next twelve months productivity has to make up for the gap between the recently announced withdrawal of in-work benefits and the rise in the minimum wage.

After the age of austerity, the strength of our economy will lie in our ability to adapt to and take advantage of the multitude of new changes coming at us from many directions. Our ability to manage these will be crucial.

To start with, business markets and government services can be transformed in months as new applications and ideas reach millions of people in days.

Many jobs have been or are being redefined. Many people are employed part time or work over the internet. In Europe alone, there are some 20,000 freelancers registered with Upwork – a portal that facilitates this kind of business.

We have all read about skill shortages. By introducing a training levy do we presume that the direction of travel is that business and industry should deal with skills themselves? Is this why larger government contractors now must have apprenticeships?

Ministers are clearly unsure about this policy because they have announced the creation of seven new national colleges for particular industries, including nuclear and high speed rail, with employers expected to contribute towards the capital costs. Resources meanwhile, are being poured into university technology colleges, while FE colleges which offer the more expensive training and vocational qualifications have had their funding cut. All this serves to do is confuse those students looking for technical education and training for a career.

Some companies have reviewed their governance in terms of stewardship, as promoted for example by Tomorrow’s Company.

In an interview with The Financial Timeslast October, Larry Page forecast that these new technologies will make businesses not 10% more efficient, but 10 times. At present we have a growing system where public administration, business and trading, shopping and entertainment, travel and leisure, running our offices, our homes and health all depend on computers dealing with one another. Sometimes we are the only human in the loop but this is what the age of productivity will eventually look like.

Because productivity has become disconnected from pay, rates for the latter have hardly gone up during the past five years. In an age of productivity, the benefits must balance out and boost both prosperity and equality. Failure to do so will mean that the age of productivity pursued to its logical conclusion will create an unequal society, the likes of which we haven’t seen for generations.